Fed Govt to scrap agencies next year

Some federal agencies will go next year, it was learnt yesterday. The Federal Government has also initiated steps to streamline the management of the subsidy scheme in the next fiscal year.

This is contained in the 2013-2015 Medium-Term Expenditure Framework and Fiscal Strategy paper submitted to the Senate by President Goodluck Jonathan.

The government’s fiscal policy was read by Senate President David Mark, on the floor of the Senate yesterday.

It said pursuant to sections 13, 12 and 11 of the Fiscal Responsibility Act, 2007, the preparation towards submission of the 2013 Budget to the National Assembly has begun with activities leading to the preparation of the 2013-2015 MTEF and Fiscal Strategy paper.

On the scraping of agencies, it said reduction in the size of government would be achieved through stricter rationalisation of available resources, including sustaining the reduction of overhead votes.

The MTEF said in furtherance of the reform agenda, the Federal Government would also “rationalise the large number of agencies based on the recommendations of the Oronsaye Committee.”

The MTEF said the figure for overhead decreased from N536 billion in 2010 to N266 billion in 2012.

It said overhead expenditure is expected to reduce in 2013 to N230 billion or 4.67 per cent of total expenditure.

The paper said: “In addition, other measures that are being implemented including deferring the procurement of administrative capital: the establishment of a Treasury Single Account (TSA) to manage cash balances better, reduce corruption as well as inefficiency in allocation of resources.

“Government has also introduced the Government Integrated Financial Management Information System (GIFMIS) to make the process of budget preparation and execution more efficient and transparent.”

It said that the focus of government will continue to be on completing ongoing projects, particularly those with high rate of return.

On fuel subsidy, it said that in the light of the huge amount paid on petroleum subsidy last year, the Federal Government has initiated steps to streamline the management of the subsidy scheme.

The restructuring, it said, will include strengthening the audit and verification process to improve its governance, transparency and accountability.

It said these are expected to yield full results next year, while the Subsidy Re-investment Empowerment Programme (SURE-P.) instrument will continue to be used as an intervention window to mitigate the impact of the partial subsidy removal.

The document said as “government continues consultations regarding future policy on subsidy, some amount is being provided for petroleum product subsidy in the 2013 budget.”

It said in recent times, the recurrent expenditure profile has tended to crowd out capital expenditure.

The increase, it said, can be attributed largely to the rising personnel cost resulting from the increases awarded to civil servants, medical personnel and Academic Staff Union of Universities (ASUU) staff since the 2009, as well as the implementation of the Minimum Wage Act 2011.

It described the personnel cost increase as a sensitive issue saying only a holistic approach can generate a viable and sustainable solution.

It said that the diversification of the economy is a critical objective of government “as our over-reliance on oil revenue has hampered the growth of the non-oil segment of the economy.”

On debt profile, it said that as at June 2012, the total external debt stock stood at $6.0 billion.

The Federal Government share of the debt, it said, was $3.8 billion (63.3%), while the 36 states and FCT accounted for the balance of $2.2 billion (36.7%)

Similarly, it said that domestic debt for the same period stood at N6.15 trillion, bringing the total debt to N7.11 trillion which is 17.8 per cent of GDP.